Carbon tax to hit commuter belt the hardest
Friday February 19 2010
COMMUTERS will bear the brunt of the carbon tax and are likely to be hit with annual bills more than 10 times higher than those paid by people living in cities.
A new analysis from the Economic and Social Research Institute (ESRI) and the Environmental Protection Agency (EPA) shows that the annual carbon tax likely to be paid by someone living in inner-city Dublin will be €25 -- but people living in the countryside could face bills of up to €275.
This is because many living outside the major cities are forced to drive to work because there is little or no public transport available. The report also found that rural houses tend to be bigger, and cost more to heat and that in cities, apartments share heat as it travels through a building.
The analysis published yesterday shows that the carbon tax, a key Green Party demand in its negotiations to enter Government, will not affect most of the party's constituents.
The party has five TDs, with four based in Dublin.
Last December the first tranche of the tax was introduced in the Budget which saw motorists hit with a hike in fuel prices as petrol rose by 4 cent per litre and diesel by 5c.
Further pain is expected in May when the tax is applied to oil and gas for home heating, and the tax will also extend to the use of coal and peat.
The move is designed to discourage use of fossil fuels and to force behavioural changes where people would use public transport instead of the private car, and heat their homes using more energy-efficient heating systems such as wood-pellet stoves.
If successful, it would reduce the State's dependency on imported fossil fuels and help reduce greenhouse gas emissions -- the primary cause of global warming.
Co-author of the EPA/ESRI Strive report, Richard Tol, said that commuting was the dominant reason why people living outside the cities would pay more, although house size and income also played a role.
"Transport, and the car commute, is the major factor," he said. "Rural houses tend to be bigger, and cost more to heat.
"Also, people living in the country tend to be richer and have more gadgets which need to be powered."
Phased
The report says that the tax rate would vary from €25 per household per year in the inner city to €275 in parts of the commuter belt. But "most" households would pay between €135 and €235 per year in carbon taxes. The tax is being introduced on a phased basis, with 4c already added to the cost of a litre of petrol.
The tax is due to be extended to home heating fuels on May 1 next and solid fuels, coal and peat will be taxed from September.
It was signalled in the Budget that the carbon tax would add an extra €43 to the cost of filling a 1,000-litre oil tank and it would add €41 to the average annual gas bill.
However, the final tax levels have yet to be set.
The delay is because of concerns about lower-quality fuels, which are exempt from the new levy, being imported from Northern Ireland.
- Paul Melia
Irish Independent
